Government is considering ending the monopoly of Zimbabwe’s gold buying agency amid growing concern over depressed prices of the yellow metal and increased cases of bullion smuggling outside the country’s borders.
Fidelity Printers and Refiners has been the sole buyer of gold through its network across the country. But the abandonment of the multi-currency system in July and tumbling prices of gold on the domestic market has resulted in side-marketing of the commodity.
The side-marketing has resulted in the precious metal being sold in neighbouring countries at higher prices.
Information gathered by Business Times shows that the Mines ministry has made a proposal to challenge this monopoly to plug revenue leakages.
As gold sales plummet to alarming levels in the past few months, to a point the country’s capacity to pay for imports is dwindling by the day, senior government officials including those in the presidency have resolved to open the market to new players with one company owned by some foreigners close to getting a permit to buy gold from all over Zimbabwe.
The decision to open up the market comes after some officials close to the mining industry say Government is divided over Fidelity’s monopoly.
“This monopoly has been the biggest problem because Fidelity does whatever they want, they should just open it up because it has been abused too much,” said a close source who requested not to be named.
“The idea is noble and only needs to be managed well to make sure people who are licensed to buy gold account for it and eventually bring it to the government,” added another source.
Fidelity is a wholly owned unit of the central bank established in 1966 a security printing and gold refinery company after the British government stopped printing currency for the Reserve Bank of Rhodesia after Ian Smith’s Unilateral Declaration of Independence.
Mining remains the country’s major source of foreign currency, after having contributed 68 percent of exports in the first half of 2019 at US$1,3 billion despite output loses in gold, the major contributor to revenues.
Gold miners association CEO Irvine Chinyenze said opening up the gold market to other buyers is long overdue.
“It would be a very welcome development, we have been lobbying for that to happen for long as we can remember because among other issues, lack of competition was suppressing prices and the producer had two options; either to sell at those low prices or sell to an alternative market which is unfortunately which was illegal,” Chinyenze said in a telephone interview.
“We hope licensing is transparent and to avoid cartels. You can have five or so buyers colluding to set a price,” Chinyenze added.